I am the editor of Forbes Magazine, and believe strongly that entrepreneurial capitalism and market-based thinking can solve the world's problems. This is my second stint at Forbes -- between 1991 and 1997, I was a reporter, a staff writer (five cover stories), associate editor and Washington bureau chief. In between, I caught the start-up bug: I co-founded P.O.V. Magazine (Adweek's Startup of the Year), and then launched Doubledown Media (Trader Monthly, Dealmaker, Private Air, etc.). As a fattening hobby, I have reviewed restaurants for various magazines since college (and was a National Magazine Award finalist for my wine writing). I used to think chronicling the world's greatest business minds made me a great entrepreneur, but I now realize my time as an entrepreneur made me an acute business journalist. For the full story, check out my book, just out in paperback, The Zeroes: My Misadventures In the Decade Wall Street Went Insane.

Jeremy Lin May Be The Dumbest Harvard Grad Ever

Sorry for the harsh headline, but I’m having a hard time coming up with any other conclusion. While I haven’t checked the Harvard core curriculum lately, it must surely be light on math, psychology and logic, and completely devoid of Marketing 101. How else to explain the self-destructive actions of its most famous basketball alum, Jeremy Lin, who has taken the global phenomenon known as Linsanity and doused it with kerosene.

(Image credit: Getty Images via @daylife)

After last night’s decision by the New York Knicks to let him walk to the Houston Rockets, almost all of the analysis has focused on Knicks owner Jim Dolan. He faced a vexing dilemma, given the back-loaded contract offer from the Houston Rockets that would have forced the Knicks to effectively pay $50 million for Lin’s services three years hence. (My friend Howard Beck of the New York Times provides a useful primer here.) How do you weigh Lin’s basketball and marketing potential against a very small sample set (he’s started all of 25 games in his career) and also against not just what he would be paid, but the larger ramifications of his contract down the line? Given that the adjectives associated with Dolan, backed up a dysfunctional track record, generally include illogical, vindictive, paranoid and dumb (and because I’m a lifelong Knicks fan, I’m being kind), he’s predictably being ripped apart.

In the end, though, I’m more fascinated by the choices Lin made. Dolan will be rich and reviled no matter what he does. Lin may have signed a big contract, but he also just provided the folks at Harvard Business School with a brilliant case study how to cost yourself millions of dollars and scads of influence when you’re not looking at the big picture.

To review, the point guard’s scrub-to-star rise in February – Linsanity! — has arguably been the best sports story of the year, played out on one of the biggest stages, Madison Square Garden. But the NBA’s complicated labor rules forced Lin to shop around his services in order to maximize his next contract with the Knicks. At first, he did so brilliantly, according to numerous reports, originally getting Houston to offer him roughly $5 million for his first two years of his contract (the maximum anyone was allowed), and then a $9 million balloon in the third year, with a team option for a fourth.

Various Knicks sources, including their coach, playing poker as deftly as a late-night drunk at Circus Circus, announced that they would match it, and that was presumably that. A global marketing machine would remain in the global marketing capital, as had been his goal all along, Lin just told Sports Illustrated.

And this where Lin flunked miserably. After the clumsy Knicks showed their hand, Lin and Houston agreed to add another $5 million to his guaranteed salary in third year – a true poison pill, since that extra $5 million would cost the Knicks an extra $20 million or so, courtesy of the NBA’s punitive new luxury tax, atop the effective $30 million bite they had already internalized.

I get why Houston did it. But why did Lin, as an equal party to the new offer, go along? I can only offer two theories:

Financial Certainty: With the revised offer, Lin guaranteed himself an extra $5 million in his pocket, three years from now. That’s serious scratch for a man who had been sleeping on his brother’s couch earlier this year. And given legitimate worries that he was way overperforming during his magical 25 game coming out, taking the sure thing now makes some sense.

But why structure it in a way so punitive to New York? If it was all about certainty, Lin could have instead tried to guarantee that fourth year (or even a fifth year). At $9 million per, that’s way more downside protection, yet spreading it out in a way that didn’t push the Knicks toward the fiscal cliff.

As for the upside, forcing the Knicks to even consider ending his tenure in New York is the truest definition of Linsanity. If Lin is even 80% as good as he showed in flashes last season, fronting a very good, very hyped Knicks team had the potential to bring him tens of millions in endorsements. But as Steve Herz, who cuts celebrity endorsement deals as president of IF Management previously told my colleague Tom Van Riper: “Lin leading the Charlotte Bobcats back to respectability wouldn’t be that interesting. It’s not something that Coca-Cola is going to play $10 million for.”

Insert “Houston Rockets” into that sentence, and you get Lin’s new reality. Rather than the golden boy on an obsessed-over team in the world’s media capital, he’s now an above-average player on a below-average team in a low-profile city.

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* Lin is is FA, Knicks wouldn’t allow to give him any offer be4 the end of last season. This is according to Howard Back’s writing abt some FA rules and how it works. You got a prob. with that, Call Howard Beck then.

who is the Big fat Liar here? and a big fat idiot*c thug and big fat m*ron.

you think u can not being punished abt anything untrue u said in internet world so u can shamelessly talk whatever u want, and whatever u not know about!

Lin had only ONE contract offer, and that was from Houston. Knicks organization was stating publically that they would match any offer, and everyone, including Lin, believed them. Houston increased the contract and called out the Knicks bluff.

You can blame Houston and you can blame the Knicks, but to blame Lin is dumb.

Right, he HAD to accept it. He was a restricted free agent. I’m not sure you completely understand the NBA and it’s CBA. Lin, as a restricted free agent, had an offer of $1M for 2012-2013 from the Knicks. If he does not sign a contract and the Knicks do not resign him to a new deal (as they did not ever give him another contract), he only has a $1M qualifying offer.

He did not hold all of the cards in the Houston contract. It’s all conjecture at this point whether he went to the Rockets and asked for more money, or the Rockets upped the contract themselves because Dolan tipped his hand too early. Most likely Dolan thought that Lin had already over kicked his coverage on the contract and Dolan wanted to stop new suitors. However, Lin does not have any real power to renegotiate a contract that would favor the Knicks. The Rockets were well aware that the contract wasn’t about Lin, but about the Knicks matching. If the Rockets presented Lin with the new deal and Lin instead came back to renegotiate for a lower salary, or a longer salary for less money, don’t you think the Rockets would have debated the reasons as to why Lin would do that? Your entire article is based on the assumption that Lin was able to negotiate his contract how he wanted it.

I hope we can operate on the assumption that the Rockets do want Lin, and did not just throw out a contract to hamper or hurt the Knicks. By upping the original offer and maxing Lin out on the 3rd year they assured themselves of Lin. Given this assumption, the Rockets would have no reason to negotiate a less onerous salary other than for the Knicks’ favor. Lin, operating as a rational individual, has no motive to lower the salary, or sign a 4 year $30M contract when he could have a 3 year $25M contract, yes?

Operating with these assumptions, then can’t we say that if Lin did try to renegotiate a contract that was more favorable to the Knicks, there would then be at least a suspicion that he was trying to use the Rockets to get him the contract he wanted with the Knicks? If this were to happen and the Rockets then pulled their contract, where would that leave Lin?

I’m curious as to what you expected Lin to do. Look at Houston’s offer and wait for NY to offer a lesser contract and sign that? If NY gave every indication that they would match any offer why wouldn’t he sign an offer sheet from another team? Also your claim that Lin and Houston went back and added another $5 million is ridiculous. As if Lin actually had a say in that. Are you saying he should have instructed the Rockets to not offer him a contract like that in hopes of not hurting NYs bottom line? To me that’s pretty dumb.

Teams owners fire players all the time. Don’t follow in Dan Gilbert’s destructive path with incendiary comments about Lebron James. Fact is, Lin was lucky to be given a shot ONLY when the roster was depleted with injuries. The so-called ballhogs as Carmelo who wants to be the big shot in NY, when Stoudemire was here before him anyways.

Lin was ready to be cut loose and sent to D-league or Europe or something; he is on a team of players who are so ungrateful (Carmelo, Smith and others); lin doesn’t care whether he is in the cirlcles of basketball greats such as Bryant, Lebron, D-Wade… He wants to get better with enough in his pocket for job security. He also wants playing time and bringing an old and veteran player such as Kidd who profess to want to lead the ball at the end of ball games (a player who committed very hard fouls on Lin) is not the ideal place for Lin to be. Lin is not about really be on a team with sooo much egos. HOW MUCH ARE YOU WILLING TO SACRIFICE YOUR DAILY LIFE WITH CONSTANT SCRUTINY AMONG PEOPLE WHO SHOW NO APPRECIATION. He was never given a contract and you criticize him for making a move and leaving ‘untold’ cash to be made? No wonder you are given a spot to rant on Forbes, all money hungry people. This is what you’re about and criticizing and harvard economics grad or and grad for that matter is utterly DUMB on your part.

So you are saying Lin is “dumb” because he should have told the rockets to make him an offer that would make it more possible for the Knicks to match. And the rockets would have agreed to this because…

Randall Lane, can I get a job as a staff writer for Forbes? I am sure it doesn’t take a lot to qualify. Let’s see .. so a guy gets an offer. Not multiple offers, just one. He then takes it. What a dumbtard, right? I see your reasoning right there.